Thursday, September 20, 2007

Privatizing Law

Fascinating article on the possibilities of privatizing law and practice at Organizations and Markets (h/t Voir Dire). I’m not big on privatizing for a number of reasons, the loss of common commitment to and from our community, the frequent failure of privatized enterprises to live up to their billing, the likelihood of losing control of their costs to the public when the usual market failures develop, etc. (see this article today on a critical UT study of private prisons), but this article does pose an interesting option, a variant on the restorative justice concept, that courts could decide as policy to accept arbitration decisions. This could cut the legs out from under much of the vested, self-serving interest in maintaining our current system as well as the unchecked power of prosecutors to make the mischief too many of them have been up to lately. Having alternatives to defense counsel who like to proclaim that they don’t care if their clients are guilty and justice is irrelevant would be a dividend as well. Something needs to shake this dysfunctional, degenerate, and demoralizing process up severely. Maybe this would be it.

Here’s the abstract if you’re interested in more detail:

Must the state handle the adjudication of disputes? Researchers of different perspectives, from heterodox scholars of law who advocate legal pluralism to libertarian economists who advocate privatizing law, have increasingly questioned the idea that the state is, or should be, the only source of law. Both groups point out that government law has problems and that non-state alternatives exist. This article discusses some problems with the public judicial system and several for-profit alternatives. Public courts lack both incentives to be customer oriented and pricing mechanisms, plus they face problems associated with the bureaucratic provision of services. When parties can choose their tribunals, in contrast, those tribunals must serve customers and be mindful about conserving resources. Competition between arbitrators also can allow for experimentation and the provision of customized services rather than a centrally planned, one size fits all system. Contracts with an arbitration clause can easily stipulate the choice of tribunal, and we argue that if government courts simply refused to overrule binding arbitration agreements, de facto privatization could easily take place. This article discusses how private adjudication of disputes could enable the market to internalize externalities and provide services that customers desire.